In this study, we have employed several in vitro models to study the factors involved in the differentiation of pancreatic precursor cells into hormone-producing cells of the islets of Langerhans and their mechanisms of action. Development of the endocrine pancreas includes a series of early events wherein precursor cells migrate to form aggregates that subsequently differentiate into islets of Langerhans. We used PANC-1 cells, a human pancreatic cell line that can be induced to differentiate into hormone-producing cell aggregates, to study regulation of cell migration and aggregation that precedes differentiation. We showed that exogenous fibroblast growth factor-2 (FGF2) was an effective chemoattractant for PANC-1 cells. We developed the following evidence that FGF2 is a paracrine stimulator of migration and aggregation of PANC-1 cells: 1) FGF2 is produced and secreted by a subset of these cells; 2) inhibition of FGF receptor tyrosine kinase inhibits cell migration and aggregate formation; 3) a subset of cells express FGF receptors-2, -3 and -4; 4) secreted FGF2 is bound to the extracellular matrix; and 5) FGF2 neutralizing antibody inhibits cell migration, an essential step in aggregate formation. We suggest that paracrine factors, such as FGF2, are important extracellular regulators of the early steps of human pancreatic precursor cell development into hormone-expressing islets in culture. These findings may provide insights that will facilitate generation of islet cells in vitro that could be used for replacement therapy of type 1 diabetes in humans. Cell-cell and cell-matrix interactions, which may be regulated by modulating the expression or activity of cell adhesion molecules, play important roles in embryonic development. Neural cell adhesion molecule (NCAM) is involved in development of the endocrine pancreas in rodents but its role in human pancreatic development is unclear. As islets of Langerhans may originate from undifferentiated progenitor cells resident in pancreatic ducts, we recently established a protocol in which human pancreatic ductal carcinoma PANC-1 cells are induced to differentiate in vitro into hormone-producing islet-like cell aggregates (ICAs). We studied the role of NCAM in PANC-1 cells during their differentiation. Within 24 hours of induction of differentiation, expression of NCAM mRNA increased and cells exhibited increased adherence to a collagen IV matrix. NCAM was concentrated at the periphery of cells in ICAs, in a pattern similar to adult human islets, whereas it was absent or diffusely expressed in undifferentiated PANC-1 cells. NCAM is involved in cell-matrix and cell-cell interactions because anti-NCAM antibody reduced adhesion of cells from ICAs to collagen IV, fibronectin and vitronectin and caused a reduction in the mean size of ICAs from 130 ?m to 60 ?m. Our data show that NCAM is needed for aggregation of islet cell precursors and suggest that NCAM is essential for the normal architecture of mature islets in humans. These initial studies have allowed us to establish in vitro cell systems in which we can study the factors that regulate differentiation of endocrine pancreas precursor cells.